Real Estate Agents Lobby for Foreign Property Rights

The Indonesian Real Estate Association (REI) chapter from North Sumatra told the national news agency Antara that there is a pressing need to extend the leasehold period for foreigners in Indonesia in order bolster the national real estate market.

The Chairman of REI in Medan, Rusmin Lawin, said, "the leasehold in Indonesia of 70 years – broken down into consecutive lease periods of 25,25 and 20 years – is no longer in keeping with the current situation." He explained in Malaysia leasehold is now 99 years with Singapore, Vietnam and Thailand now granting longer leasehold periods.

The real estate professional said that longer leasehold periods and accompanying rights for foreign investors would lure investment, especially in areas bordering Malaysia, Singapore and Thailand, such as North Sumatra.

Lawin also argue that a liberalization of leasehold rules would result in more revenues for the government through the elimination of "name-lending" arrangements in which property is held on behalf of foreign owner by an Indonesian nominee.

Previous efforts to extend property ownership rights to foreigners or the period of leaseholds have been rebuffed by the Constitutional Courts which insists foreign property ownership in Indonesia is specifically forbidden by the Constitution.

The REI have proposed a number of changes affecting foreign property ownership in Indonesia, including:

● Ownership of property by foreigners for a period of up to 70 years.

● Establishment of clear specifications for real estate products.

● The right for individual property ownership as opposed to current corporate ownership.

● The specification of a certain number of floors available for foreign ownership in apartment developments.

● A revision of Property Law No. 41 of 1996 regarding foreign land ownership and leasehold by foreigners in Indonesia.